South Africa's economy was falling further and further behind the rest of the continent owing to deficiencies in the education system and its skills development efforts, which was, in turn, eroding the country's competitive ability, Econometrix chief economist Azar Jammine said on Thursday.

Jammine pointed out during a discussion on the World Bank's ‘Second Investment Climate Assessment' report, that South Africa's economy has been following the trends of the world economy, but that it had not followed the rest of the African countries' economic growth trends.

South Africa's role on the African continent has declined and it was falling behind the rest of Africa.

Jammine noted that in most other countries on the continent, the role of government was getting smaller, while businesses, and particularly small businesses, were allowed to grow.

However, in South Africa, there was far too much power in the hands of government, big businesses and organised labour and not enough power in the hands of small businesses.

The country's private sector was thriving, but, however vibrant it might be, it was still not resilient enough, given the lack of small businesses, he said.

The high unemployment rate, which currently stood at 25,3%, the fact that so many people were becoming discouraged from looking for jobs and other structural challenges, which were partly to blame for the underperformance of the local economy, had much to do with a lack of education or the deficiencies of the education system, he added.

Despite South Africa spending a lot of funds on education, the matric pass rate has been dropping over the past seven years.

Jammine highlighted that out of the 1,5-million children who had started school in 1997, only about one-third had reached grade 12. Of those, only 60% had passed matric and only 7% had received university exemption.

Jammine highlighted that the science and mathematics statistics were also worryingly low, questioning how a country could build its skills base and promote entrepreneurship if the education system was underperforming.

Gordon Institute of Business Sciences China-Africa Network director Dr Martyn Davies added that the South African economy was also falling further and further behind that of other developing countries like China and India, owing to the level of education and the fact that skills training was lagging.

Both Davies and Jammine agreed that entrepreneurship was the best way to grow local employment.

However, Davies highlighted that the disconnect between the first and second economies in South Africa was a big challenge.

South Africa was trying to apply an ideal first-world regulatory system to an emerging, developing world environment, which would not succeed, he stated.

Meanwhile, Davies said that Africa was, post the economic crisis, faced with the most enabling, liquidity providing environment it was ever likely to see, given the rise of developing Asian countries like China, India and South East Asia and their increasing demand for mineral commodities, which Africa had an abundance of.